the investment case for sustainable ammonia synthesis ... · the investment case for sustainable...

TheInvestmentCaseforSustainableAmmoniaSynthesisTechnologies

TrevorBrown13thAnnualNH3FuelConference

September20,2016

TrevorBrown:independentammoniaindustryanalyst•  December2011:begantrackingglobalammoniacapacity&expansions•  June2013:publishedonlinedatasetforNorthAmerica•  November2013:launchedwebsiteAmmoniaIndustry.com•  June2016:passedfinalexamsinCharteredFinancialAnalystprogram

Rawdataforalltables/chartsavailablefromhPps://ammoniaindustry.com

Parts1,17,and42of±99

TheInvestmentCase•  Part1:History

–  InnovaVons,#1to#5•  Part17:CurrentTechnologyDeployment

–  GrowthDrivers–  Problems–  Recentindustrytrends

•  PlantSize•  FeedstockMix

•  Part42:FutureTechnologyDeployment–  InnovaVons,#1to#5

2TrevorBrown:hPps://ammoniaindustry.com“TheInvestmentCaseForSustainableAmmoniaSynthesisTechnologies,”NH3FuelConference,September20,2016

HISTORY:InnovaVon#1Haber-BoschProcess

•  Haber-Bosch:–  1909:LaboratorydemonstraVon:125ml/hour–  1913:IndustrialdemonstraVon:20tonnes/day–  1920:Industrialdeployment:300,000tonnes/year

•  “Bellwether”inorganicchemistry–  FritzHaber

•  High-pressure,hightemperatureindustrialprocesses–  CarlBosch/BASF

•  Catalystdevelopment–  AlwinMiPasch:systemaVcopVmizaVon:~20,000individualaPempts/iteraVons

•  OsmiumàUraniumàIronàdecadeslater(KBR),Ruthenium


HISTORY:TechnologyPathways(1918)

SOURCE:hPps://babel.hathitrust.org/cgi/pt?id=uiug.30112019245163;view=1up;seq=7

InorganicAmmonia1.  Mined:

ChileanSaltpeter:NaNO32.  Byproduct:

SteelproducVon/cokeovens:(NH4)2SO4

~46%TotalAmmoniaSource

3.Synthesized:CyanamidProcess:CaCN2

TrevorBrown:hPps://ammoniaindustry.com“TheInvestmentCaseForSustainableAmmoniaSynthesisTechnologies,”NH3FuelConference,September20,2016 4

HISTORY:InorganicNitrogen(1920)

SOURCE:hPps://books.google.com/books/about/ProducVon_of_atmospheric_nitrogen.html?id=-NwuAAAAMAAJ


HISTORY:AtmosphericNitrogen(1920)

SOURCE:hPps://books.google.com/books/about/ProducVon_of_atmospheric_nitrogen.html?id=-NwuAAAAMAAJ


HISTORY:InnovaVon#2Feedstocks

•  “Crazy”–theadopVonofnaturalgasfeedstockintheUS:1940–  “Beforethewar,whenammoniawasmadechieflyfromcoal,theplantswerebuiltincoalproducingareas,generally

nearthecokeovens.SomeindustrialchemistsandOrdnanceofficers,parVcularlyMaj.JohnP.Harris,wereconvincedthatinVmeofwarenoughammoniaforthemassproducVonofexplosivesandsmokelesspowdercouldneverbeproducedfromcoal.Thepre-1940OrdnanceplansthereforecalledfortheproducVonofammoniafromnaturalgasandthelocaVonofnewammoniaplantsintheSouthwestratherthaninthePennsylvania-WestVirginia-Kentuckycoalregion.‘PeopletoldmeIwascrazywhenIproposedtheidea,’Harrisdeclared,‘butitsucceededandtodayalltheammoniaproducersusenaturalgas.’”hPp://history.army.mil/html/books/010/10-10/CMH_Pub_10-10.pdf


HISTORY:TechnologyPathways(1935)

SOURCE:hPps://books.google.com/books?id=v9unAAAAIAAJ&printsec=frontcover#v=onepage&q&f=false

8

•  Technologymix:•  Oneprocess•  ManypracVVoners/IPs

•  Feedstockmix:•  TransiVonàdiversificaVon

TrevorBrown:hPps://ammoniaindustry.com“TheInvestmentCaseForSustainableAmmoniaSynthesisTechnologies,”NH3FuelConference,September20,2016

HISTORY:InnovaVon#3AirSeparaVonTechnologies

•  Because:Ammonia=AnchorCustomerfor100yearsofR&DInvestment

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SOURCE:EricMorgan,U.Mass-Amherst,“Techno-EconomicFeasibilityStudyofAmmoniaPlantsPoweredbyOffshoreWind”hPp://scholarworks.umass.edu/cgi/viewcontent.cgi?arVcle=1704&context=open_access_dissertaVonsTrevorBrown:hPps://ammoniaindustry.com“TheInvestmentCaseForSustainableAmmoniaSynthesisTechnologies,”NH3FuelConference,September20,2016

HISTORY:InnovaVon#4CarbonCapture…&SequestraVon•  CarbonCapture…

Because:Ammonia+Urea=colocaVonofsupply+demand–  GirbotolProcess/MEA(monoethanolamine:RNH2)–  Benfield/HotPot(hotpotassiumcarbonate)/BenfieldLoHeat–  Selexol(solvent=DMPEG)/RecVsol(solvent=methanol)–  aMDEA(BASF)

•  “Itallstartedwithammonia.BASFwantedtoreducethecostofproducingammonia.Intheearly1970s,BASFwasthereforeexploringmethodsforseparaVngcarbondioxide(CO2)moreefficientlyfromthesyntheVcgasusedintheproducVonprocess.”hPp://www.intermediates.basf.com/chemicals/topstory/amdea

•  ...andSequestra@on–  KochIndustries:Enid,OK:1982:0.7milliontonnes/year(Benfield)–  DakotaGas:Beulah,ND:2000:80%of3milliontonnes/year(RecVsol)

•  NOTE:ammoniaproducVonsecondarytosyngasproducVon–  CVRPartners:Coffeyville,OK:2013,1milliontonnes/year(Selexol)–  Agrium:Redwater,AB:2017,0.3-0.6milliontonnes/year(Benfield)

•  NOTE:CurrentacVon:Yara,Norway:100%NaVonalCarbonCapture&SequestraVonby2022hPps://www.regjeringen.no/globalassets/departementene/oed/pdf/summary.pdf


HISTORY:InnovaVon#5DeploymentatMassiveScale

•  DemonstraVonofmassivetechnologydeployment,infrastructureinvestment•  akaTheGreenRevoluVon

China,AmmoniaCapacity:(millionmetrictonsN)•  1960:0.36•  1970:4.98•  1980:12.28•  1990:17.5•  2000:27.5•  2010:40Roughly+1milliontonsammoniaeveryyearfor50years

SOURCE:HarryVroomen,TFI“TheHistoryofAmmoniato2012”:hPp://www.firt.org/sites/default/files/2Vroomen.pdf


TODAY:“Cheap”GasàCapacityExpansion•  2013:EPCcontractorsstopgivingfixed-price

construcVoncontracts(laborcosts).•  2015:Nitrogenpricesplummet,jeopardizing

projectfinancing.Projectsremainonhold.•  Mostprojectsinfinancinglimbo:start-uppushed

backfrom2017/18to2019/2020.•  2016:EPCcontractorsstartgivingfixed-price

agreementsagain(eg:FaVma,Cronus).•  DespitecancellaVons,acVvepipelinesVll

expanding.

12

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2014 2015 2016 2017 2018 2019 2020 2021 2022

July2014:ThePipeline=16.7milliontons

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2014 2015 2016 2017 2018 2019 2020 2021 2022

June2015:ThePipeline=18.3milliontons

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2014 2015 2016 2017 2018 2019 2020 2021 2022

June2016:ThePipeline=20.5milliontons


2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

UNLIKELY 222,238 322,345 322,345 3,756,294 4,556,294 5,541,794

POSSIBLE 467,595 1,562,595 7,208,534 8,084,534 8,084,534 8,084,534

LIKELY 4,448,506 5,616,194 5,616,194 5,616,194 5,616,194 5,616,194 5,616,194

DONE 297,078 932,858 997,426 1,193,669 1,706,909 1,706,909 1,706,909 1,706,909 1,706,909 1,706,909 1,706,909

EXISTING 18,009,962 18,009,962 18,009,962 18,009,962 18,009,962 18,009,962 18,009,962 18,009,962 18,009,962 18,009,962 18,009,962 18,009,962

EXISTING

DONE

LIKELY

POSSIBLE

UNLIKELY

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

AmmoniainNorthAmerica:CapacityProjecHon,June2016Metrictonsofammoniaperyear,cumulaLvenewcapacity.

Dataasof06/07/2016.Source:hSps://ammoniaindustry.com

TODAY:QuesVonableIndustryAbility

•  Engineering,Procurement,ConstrucVonperformance:–  ActualBuilds:Schedules&Budgetswayofftarget–  RiskstoTechnologyTransfer:fromLaboratoryScaletoIndustrialDeployment


TODAY:CapitalIntensity

•  CapExpermetrictonAmmonia…bewareapples:orangescomparisons

•  $1,000/tonruleofthumbsVllvalid

•  Yara/BASF@Freeport:25%CapExreducVonbyusingH2Noneedforreformers/frontend

•  LawsuitsoverconstrucVoncosts:–  Greeneville,TN–  ElDorado,AR–  Wever,IA

•  Note:Spiritwood,NDcancelled


TODAY:DiversificaVonBusinessModels&Feedstocks

•  2016NewUSAmmoniaCapacity:6plants,+4.6milliontonsAverageSize:650,000metrictons/yearMaxSize:1,300,000 CFIndustries,D’ville,LAMin:67,000mtpy USNitrogen,Greeneville,TN

15

•  2017-18NewUSAmmoniaCapacity:9plants,+3.3milliontonsAverageSize:370,000metrictons/yearMax:803,000 Yara/BASF,Freeport,TXMin:33,500 ForVgen,Geneva,NE


FUTURE:AmmoniaInnovaVon#1+/-Haber-Bosch

•  Avoidance–  NutrientAddiVon:Covercrops/OrganicSystems/BioferVlizer(biosolids)–  Biomimicry:GMO(legumetraitsincommoditycrops)

•  Efficiency–  NutrientRetenVon:NoTill/IrrigaVonSystems–  PrecisionAg(bewareJevonsParadox)–  FoodWasteReducVon/DietChanges/SyntheVcMeat–  NutrientLossRemediaVon

•  FeedstockDiversificaVon–  CarbonRecycling:Biomass,Biogas,Waste(beware:GDPGrowthv.CircularEconomy)–  Low/Zero-CarbonH2

•  TechnologyDiversificaVon–  IncrementalInnovaVon,Haber-Bosch:

•  Efficiency:catalysts,temperature,pressure•  OperaVons:intermiPency

–  RadicalInnovaVon:SolidState/LiquidStateElectrochemicalprocesses,etc


InnovaVonv.InvenVon:eg:WastePlasVcFeedstock

•  ERS:Antwerp,Belgium–  Investment:SaudiArabia

Technology:China–  Announced:2015

CapEx:€3.7billion(>$4billion)–  Feedstock:3.485milliontonnes/year–  Ammonia:645,500tonnes/yearNET

(4,500tonnes/dayGROSS)–  Urea:1,231,500tonnes/year

•  NOTE!ShowaDenko:Ogimachi,Kawasaki–  ProducingammoniafromplasVcsince2003–  CapEx:¥7.4billion(>$73million)–  Ammonia:175tonnes/day

•  2015=2x2003CapExperton,at10xscale–  Whatefficiencyofscale?

17

Waste to Chemicals in Antwerp

Energy'Recovery'Systems'Company'plans)to)build)a)Waste'to'Chemicals'(WtC)'

plant'in)the)Antwerp'port,)changing)on)a)yearly)basis)3.485.000)tons)of)

industrial,'non@recyclable'waste'into)645.500)tons)of)green'ammonia'and)

1.231.500)tons)of)green'urea.)Ammonia)is)used)as)base)chemical)in)the)Antwerp)

chemical)cluster)and)urea)is)a)sustainable)fer'lizer.)ERS)and)the)port)authori'es)

are)currently)nego'a'ng)the)concession)of)150)ha)at)the)Delwaidedock.))

Waste to Chemicals

waste)

Thermoselect©)

gasifica'on)

ammonia)

urea)


FUTURE:AmmoniaInnovaVon#2CarbonReducVon:FerVlizer

•  Ammoniaproduc@oncauses1%ofglobalGHGemissions(2012data):–  170millionmetrictonsammoniaproduced–  2.867tonsCO2/tonammonia(globalaverage)

•  USindustryaverage:2.129tonsCO2/tonammonia•  Chinaindustryaverage:4.429tonsCO2/tonammonia

NOTE:improving!Closed24.2milliontonscapacityinlast3years,mainlycoal.–  33,843millionmetrictonsCO2emissionsà1.44%globalCO2emissions–  47,599millionmetrictonsGHGemissionsà1.024%globalGHGemissions–  NOTE:refersONLYtofossilcarboninput,NOTlife-cyclecarbonSee:hPps://ammoniaindustry.com/ammonia-producVon-causes-1-percent-of-total-global-ghg-emissions/

•  1%isabignumber


FUTURE:AmmoniaInnovaVon#3CarbonReducVon:Energy

•  SustainableAmmoniaSynthesisTechnologies=“deboMlenecking”opportunityforglobaltransi@ontolowcarboneconomy

•  OncedecoupledfromfossilextracVon,potenValGHGimpactfarexceeds1%•  MulVpleBusinessModels:

–  AnchorCustomer(technologydemand)•  CommercializaVonoflargescalerenewableH2technologies/capturedcarbon

–  NewProducts•  LiquidFuel•  EnergyDistribuVon•  EnergyStorage•  Resilience/RiskMiVgaVon/DiversificaVon/RenewableEnergyMarketPenetraVon•  MulVple/FlexibleRevenueStreams

–  NewByproducts•  Water,FerVlizer,O2,CO2

–  NewCustomers&NewMarkets


FUTURE:AmmoniaInnovaVon#4CarbonReducVon:Biosphere

•  TradiVonalAmmonia-Ureacarbon“cycle”:

•  CCSProposedPathway:“UreaYieldBoosVng”–  Note:nonsensecarbonaccounVng–  See:“UreaProducVonisNotCarbonSequestraVon”hPps://ammoniaindustry.com/urea…not-sequestraVon/

•  BECCSTechnologyPathway:

“CarbonNegaVveUrea”–  Note:C:HraVohigherinbiomass–  ThusgreatercapturepotenVal:carbonharvesVng–  RequirescommercializedsequestraVontechnology


CO2toair

UreaAmmonia+CO2

FossilCXHX CO2toair

UreaAmmonia+CO2

UreaAmmonia+CO2

CO2toair

FossilCXHX CO2toair

BiomassCXHX

FUTURE:AmmoniaInnovaVon#5DeploymentatMassiveScale

•  BillMcKibben,NewRepublic,August2016hPps://newrepublic.com/arVcle/135684/declare-war-climate-change-mobilize-wwii

–  “EvenifeverynaVonintheworldcomplieswiththeParisAgreement,theworldwillheatupbyasmuchas3.5degreesCelsiusby2100–notthe1.5to2degreespromised.”

–  MarkZ.Jacobson,Civil&EnvironmentalEngineering,StanfordUniversity•  Demonstrateshowall50USStatescouldachieve100%renewableenergy.

Levelofdetail:eg,Alabama:59.7km2residenValroo�opsunshadedbytreesandpointedintherightdirecVonforsolarpanels.

•  Similar“naVonalblueprints”for139countries.USdata:hPp://web.stanford.edu/group/efmh/jacobson/ArVcles/I/USStatesWWS.pdf&Globaldata:hPp://www.scienVficamerican.com/arVcle/139-countries-could-get-all-of-their-power-from-renewable-sources1/

–  USDeploymentScale:RequiredRenewablePowerGeneraVon•  6,448GWtotalby2050.Atcurrentpace(16GWin2015),wouldtake405years.•  SolarCity’s“GigaFactory”(manufacturing1GWsolarpanelsperyear)

35YearRequirementà295GigaFactoriesacrossUS,6perState.SameforWind.–  GlobalInvestmentScale:

•  Currentglobalinvestmentinfossilfuelinfrastructure:$20trillioninstalled•  Thus:replacementinfrastructureinvestments,2016to2050:$570billionperyear


–WorkinProgress–PleasesendcorrecVons/addiVons

22

TrevorBrown

[email protected]://ammoniaindustry.com

the investment case for sustainable ammonia synthesis ... · the investment case for sustainable...

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